Springtime Shelter Island Real Estate Market Report

The recent trifecta of a nor’easter, earthquake, and solar eclipse, along with the impending cicada swarm, has been the talk of the town. Some ponder the universal message behind these events, while others attribute them to an ongoing global transition post-pandemic.

In the realm of real estate, market dynamics reflect shifts in human behavior. Both sellers and buyers, as well as landlords and tenants, are experiencing transitions.

On the sales front, limited inventory persists for homes and vacant land. Many potential sellers, deterred by scarce available properties and associated costs, have postponed plans to move. However, recent weeks have seen these homeowners considering alternative options for their next steps, potentially leading to increased inventory. Homes purchased during the pandemic, often renovated to high standards, are now being reassessed by owners who have returned to urban life, and are re-evaluating the investment made and how much future time they plan to spend at their Shelter Island house.

Buyers, in contrast to the pandemic-fueled frenzy, are now more patient and discerning, waiting on the sidelines for either the one property that entices them to take a ride out, or enough listings to make it worth the trip. Perception and becoming accustomed to change are two things that buyers experience; While rising interest rates initially posed challenges, many are adapting to mid 5%-6% rates, with an increase in cash buyers. Changes in the Community Preservation Fund (CPF) transfer tax from 2% to 2.5% have also influenced market dynamics, particularly for purchases hovering in the $2 million mark, where there is no exemption. As is the case with many governmental changes, buyers in time will adjust to this development as well.

Concerns over regulatory changes, including moratoriums on large home building and docks, have sparked mixed reactions. While some are optimistic, others express frustration with the Town’s regulatory approach.

The rental market has also undergone shifts. Pre-pandemic, hundreds of rentals were available; Then COVID prompted many landlords to utilize their properties or rent at higher rates. The 2023 rental season was subdued due to global travel opportunities post-vaccination. Rental rates have adjusted accordingly, with many good options available. Regulation protocols from the Town now include an in person inspection. While many landlords have opened their doors for inspections, others have decided that the associated costs of compliance, with the new pool window alarm regulation for example, along with permit fees, make renting their houses less attractive.

Shelter Island’s real estate market, amidst cosmic and normative shifts, continues its perpetual transition. Interpretation and action based on these trends will determine the market’s trajectory, albeit for better or worse. Despite recent challenges, a positive outlook for the future prevails.